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STOCK PLEDGE AGREEMENT
This Stock Pledge Agreement (this "AGREEMENT") is made effective as of
August 18, 1999, by and among The Tracker Corporation of America, a Delaware
corporation ("TRACKER"), Xxxxx X. Xxxxx ("PLEDGING OFFICER"), a resident of the
Province of Ontario and an executive officer of Tracker, Tracker being the
borrower under the Series 1 Bridge Note Purchase and Security Agreement dated
August 18, 1999 (the "PURCHASE AGREEMENT"), by and among Tracker and the
Purchasers thereunder (in such capacity, the "BORROWER"), and the Purchaser(s)
pursuant to the First Closing. Defined terms used and not otherwise defined in
this Stock Pledge Agreement shall have the meanings ascribed to them in the
Purchase Agreement.
BACKGROUND
A. Borrower is indebted to Purchasers in the collective sum of up to
$3,000,000, evidenced by one or more Bridge Notes of Borrower for such amount
issued by Borrower pursuant to the First Closing, a copy/copies of which are
attached hereto as EXHIBIT A.
B. Borrower has agreed to cause certain stock owned by Pledging Officer to
be pledged to Purchasers as security for Pledging Officer's guaranty of the
repayment of the Bridge Notes evidenced by the Guaranty Agreement dated August
18, 1999 executed by Pledging Officer.
In consideration of the foregoing premises, Ten Dollars ($10.00) in hand
paid, and other legal and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereby agree to the following terms
intending to be legally bound thereby.
1. PLEDGE.
In consideration of the transactions consummated under the Purchase
Agreement pursuant to the Second Closing, Pledging Officer hereby pledges and
grants to Purchasers of Second Closing Bridge Notes a security interest in and
to the 600,000 common shares of the capital stock of The Tracker Corporation of
America (the "PLEDGED SHARES").
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2. TRANSFER AND POSSESSION BY REPRESENTATIVE.
The Pledged Shares shall be delivered at the Second Closing, by the
delivery of a duly endorsed certificate therefor and an attached blank stock
power executed by Pledging Officer. The Pledged Shares shall be held by the
Representative (as defined in the Purchase Agreement) or its designee as
security for the repayment of the Note (which shall not be disposed of except in
accordance with the provisions of paragraph 6 of this Agreement) with duly
executed stock powers attached. Upon the first to occur of either full and
final payment of the First Closing Bridge Notes purchased by Purchaser(s) or the
conversion thereof pursuant to its terms, the Pledged Shares shall be released
from the Pledge as provided pursuant to this Agreement and such shares shall be
returned to Borrower. The Representative's failure to tender any shares so
released from the Pledge within fifteen (15) days after final payment or
conversion shall render this Agreement null and void, PROVIDED that no such
termination of this Pledge Agreement shall be effective unless Borrower or
Pledging Officer shall have given written notice of such failure and Purchasers
shall have had seven (7) days from the later of: (1) the date of the written
notice, or (2) the expiration of such fifteen (15) day period to cure the
failure to tender such Pledged Shares. In order to induce Representative to
serve as escrow agent hereunder, the parties hereby covenant and agree as
follows:
(1) Representative shall be obligated to perform only such duties as
are expressly set forth herein, and shall not be required, in carrying out its
duties, to refer to any agreement, instrument, or document.
(2) Representative may rely on, and shall be protected in acting or
refraining from acting upon, any written notice, instruction, or request
furnished to it pursuant to this Agreement and believed by it to be genuine and
to have been signed or presented by the proper party or parties. Representative
is acting as a depositary only and is not a party to or bound by any agreement
or undertaking which may be evidenced by or arise out of any items delivered to
it pursuant to this Agreement, and is not responsible or liable in any manner
for the sufficiency, correctness, genuineness, or validity of any such items
undertakes no responsibility or liability for the form or execution of such
items or the identity, authority, title, or rights of any person executing or
depositing same. Representative shall not be liable to any of the parties to
this Agreement or their respective heirs, successors and assigns for any action
taken or omitted to be taken in good faith.
(3) In the event of a dispute between any of the parties hereto,
sufficient in the discretion of Representative to justify its doing so,
Representative shall be entitled to tender into the registry or custody of any
court of competent jurisdiction held by Representative under the terms of this
Agreement, together with such legal proceedings as it deems appropriate, and
thereupon to be discharged from all further duties under this Agreement. Any
such legal action may be brought in any such court as Representative shall
determine to have jurisdiction thereof.
(4) Representative shall not earn any fees in connection with its
duties pursuant to this Agreement.
3. VOTING RIGHT AND DIVIDENDS.
During the term of this pledge, and so long as Borrower is not in default
in the performance of any of the terms of this Agreement or the Purchase
Agreement or the Bridge Notes, Pledging Officer or its designee shall have the
right to vote the Pledged Shares on all corporate questions and receive all
dividends or distributions of cash or property distributed in respect of the
Pledged Shares.
4. ADJUSTMENTS.
In the event that, during the term of this Agreement, any share dividend,
reclassification, readjustment, or other change is declared or made in the
capital structure of Tracker, all new, substituted, and additional shares, or
other securities, issued by reason of any such change and in connection with the
Pledged Shares, such new shares shall be held under the terms of this Agreement
in the same manner as the Pledged Shares originally pledged hereunder.
5. WARRANTS AND RIGHTS.
In the event that during the term of this Agreement, subscription
warrants or any other rights or options shall be issued in connection with the
Pledged Shares, such warrants, rights, and options shall be immediately assigned
by Purchasers to Borrower, and if exercised by Purchasers all new shares or
other securities so acquired by Purchasers shall be immediately assigned to the
Borrower to be held under the terms of this Agreement in the same manner as the
Pledged Shares originally pledged hereunder.
6. DEFAULT.
In the event that Borrower defaults in the performance of any of the
terms of this Agreement or the Purchase Agreement, or under the Bridge Notes,
Purchasers shall have the rights and remedies provided in the Uniform Commercial
Code in force in the State of Georgia on the effective date of this Agreement,
and in this connection, Purchasers may, upon five days' notice to Borrower with
a copy to the Representative, sent by certified mail, and without liability for
any diminution in price which may have occurred, sell all the Pledged Shares
remaining in the possession of the Representative (which shares shall be
delivered by the Representative to Purchasers) in such manner and for such price
as the Borrower may determine. At any bona fide public or private sale
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Purchasers shall be free to purchase all or any part of the Pledged Shares. Out
of the proceeds of any sale Purchasers may retain any amount equal to the
principal and interest then due on the Bridge Notes plus the amount of all
expenses of such sale, and shall pay any balance of such proceeds to Pledging
Officer less any other amounts owing by Borrower to Purchasers, such as actual
attorneys' fees and costs incurred. In the event that the proceeds of any sale
are insufficient to cover the principal and interest of the Bridge Notes plus
actual attorneys' fees and costs plus expenses of the sale, Borrower shall
remain liable to Purchasers for any deficiency.
7. INDEMNITY.
In consideration of Representative agreeing to serve pursuant to the
terms hereof, each of the parties, jointly and severally, agrees to indemnify
the Representative for any fees, costs and expenses and hold the Representative
harmless from any liability, that may arise from his serving as the
Representative hereunder.
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BORROWER AND REPRESENTATIVE SIGNATURE PAGE
TO
STOCK PLEDGE AGREEMENT
FIRST CLOSING
IN WITNESS WHEREOF, the parties have executed or caused their duly
authorized officer to execute this Agreement as of the date first written above.
BORROWER:
THE TRACKER CORPORATION OF AMERICA
By: /s/ Xxx X. Xxxxxxxx
----------------------
Xxx X. Xxxxxxxx
REPRESENTATIVE:
SOVCAP EQUITY PARTNERS, LTD.
By: /s/ Xxxxx X. Xxxxxx
----------------------
Name: Xxxxx X. Xxxxxx
Title: President
PLEDGING OFFICER:
Xxxxx X.Xxxxx
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PURCHASER SIGNATURE PAGE
TO
STOCK PLEDGE AGREEMENT
FIRST CLOSING
PURCHASER:
By:
Name:
Title:
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